Posts Tagged ‘saab muller’

For the first time since April 4, cars are rolling off the Saab assembly line in Trollhattan, Sweden, marking a turning point in a financial crisis that came close to crushing the struggling maker.

Operations at the maker’s headquarters plant came to a halt when suppliers launched a boycott over unpaid bills. With sales running short of expectations, the maker was forced to seek additional sources of short-term funding, but several initial proposals – including a deal with Chinese automaker Hawtai — fell through, raising questions about Saab’s viability.

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But, earlier this month, the Swedish maker lined up an alternate deal with the major Chinese dealership chain, Pang Da. The preliminary agreement is moving ahead and Saab was able to reach an agreement with its vendors to once again begin stocking its Trollhattan plant.

“This is a great day for our company and it is great to see the plant running again. We have gone through a rough patch in recent weeks, but Saab is back in action again,” said Victor Muller, chairman of Saab and the head of the Dutch-based company that acquired the Swedish firm from General Motors in February 2010.

Saab could distribute a $10,000 Chinese-made car in the U.S., says Chairman Muller.

Seemingly every year for much of the past decade, one or more of the ambitious Chinese automakers has paid cash for a spot at Detroit’s North American International Auto Show, promising to soon have a product ready for the U.S. market. This past January, BYD outlined plans to open up a limited distribution network with dealers that would sell not only cars but solar generators and high-efficiency light bulbs.

So far, none of the brands has made the jump across the Pacific, whether due to quality, safety, pricing or other concerns. In fact, one of the biggest challenges for an automotive wannabe is simply setting up an American distribution network. So, tying up with an established brand could be the critical step needed for a maker, say Hawtai Automotive Group, that doesn’t want to wait any longer.

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And Hawtai may have just bought into one of those established brands, having spent 120 million Euros to acquire a 29.9% stake in cash-starved Saab, (while also offering the Swedish maker another 30 million Euro loan).

One of the reasons Saab Chairman Victor Muller agreed to the deal was to gain access to the booming Chinese market. But Hawtai, it seems, sees Saab as a way to get into the U.S., according to a report in the trade journal, Automotive News.

Muller said Saab could start distributing a Chinese-made product that would be priced as low as $10,000, and which could start showing up in the States within two to three years.

A complex deal that would sell Saab assets to a Russian businessman then lease them back to the Swedish company could help save the cash-strapped automaker.

Saab Automobile has been frantically searching for new sources of revenue in recent days as it has burned through much of the funds it raised through a loan from the European Investment Bank, or EIB, last year. The carmaker’s main assembly plant, in Trollhattan, has been shuttered several times because suppliers have refused to deliver much needed parts citing millions of dollars in unpaid bills.

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The white knight is Vladimir Antonov, a one-time investor in Spyker Cars, the Dutch-based company that purchased Saab from General Motors in early 2010. Antonov would provide a financial lifeline by purchasing key assets and then leasing them back to Saab. The deal must still be authorized by the Swedish government, which backed Saab’s loan from the EIB.

Antonov was forced out of Spyker by GM, in late 2009. The U.S. maker refused to negotiate with the Dutch company while the oligarch was one of its investors. But Antonov stepped back in, earlier this year, when Spyker sold him its Dutch-based sports car operations.

The Saab assembly line re-starts, earlier this year, after the Swedish maker's sale to Dutch Spyker.

Conventional wisdom in the auto industry says that economy of scale is the only way automakers will survive in the future.

Then again, there’s never been anything conventional about Saab, at least not when it was a successful independent automaker. Saab’s best cars have never been conventional, either. And the way tiny Dutch sports car maker Spyker Cars tried to save the brand wasn’t conventional.

Spyker, which failed to close the deal in its initial try to buy Saab, was finally able to put a winning bid together in February, just as former owner General Motors was ready to turn out the lights on the faltering Swedish subsidiary.

But Victor Muller, co-founder and CEO of Spyker and now chairman of Saab, promised his plan will make Saab profitable within as little as two years. The key will be to reduce the break-even point for the number of cars it produces from 120,000 to 85,000 cars while building vehicles that the loyal core of Saab aficionados want. (more…)